dark money

If 2014 was the “Year of Dark Money” in elections, then 2016 is likely to be the “Year of Way, Way More Dark Money” — that is, unless something big changes soon.

One of the most troubling aspects of the explosion of big money in politics in recent years is the rapid rise in spending by groups that aren’t required to disclose their donors.

Right now, corporations and super-rich political donors like the Koch brothers can funnel millions into elections through groups that hide their identities, leaving voters and candidates unable to tell who’s behind the attack ads they buy in bulk, or what their agendas are.

More than $600 million of this so-called “dark money” has already been poured into our federal elections, and that’s only going to increase as we ramp up for the next presidential race.

Americans aren’t happy about this.

When President Barack Obama called in January for a “better politics” where “we spend less time drowning in dark money for ads that pull us into the gutter,” he wasn’t just speaking for himself.

He was tapping into a deep-seated unease among everyday Americans who know that our political system can’t work for us when it’s awash in millions of dollars of untraceable money.

But President Obama can do more than simply call attention to the problem. He can take a big step toward fixing it by issuing an executive order requiring companies with government contracts to disclose their political spending.

That would mean that many of the nation’s biggest corporations — like Exxon Mobil, Lockheed Martin, AT&T, Chrysler, and Verizon, just to name a few — would have to let the American people know about their political spending. That would turn some of that dark money into plain old “money.”

As The Washington Post editorial board wrote earlier this year, disclosure is “the backbone of accountability.” The public needs to be able to follow the money trail, see who’s behind political spending, and call them out when they don’t like what they see.

Even the Supreme Court’s conservative majority, which opened the floodgates to unlimited corporate political spending with its 2010 Citizens United decision, has underscored the need for disclosure. Transparency, wrote Justice Anthony Kennedy in the ruling, “enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Today, only one-fourth of the country’s largest government contractors disclose their contributions to outside groups. That means that many of the corporations receiving the biggest government contracts — from taxpayer money — are likely doing a great deal of secret spending to influence elections.

President Obama is right: Ordinary Americans are tired of being pulled “into the gutter.” We’re tired of seeing corporations rig our political system with untold amounts of money from undisclosed sources.

The White House should issue an executive order to let voters see for themselves who’s trying to buy political influence to distort our democracy.

What are these corporations trying to hide? And why should We the People hand over our taxpayer money to help them hide it?

Yesterday People For the American way joined more than fifty other organizations in sending a letter to President Obama asking him to issue an executive order requiring government contractors to disclose all of their political spending.

Right now, corporations with government contracts are able to funnel unlimited sums of dark money to influence the elections of those who can put pressure on the officials deciding who is awarded future contracts. Contracts should be awarded to those best for the job, not those who can shell out the most political cash.

But with the stroke of a pen, President Obama could require that government contractors disclose their political spending. This would increase transparency and accountability in our democracy and bring us closer to the “better politics” the president called for in his State of the Union address – a politics in which we “spend less time drowning in dark money for ads that pull us into the gutter.”

And we are indeed drowning in dark money. In 2014's ten most competitive Senate contests, more than 70 percent of outside money spent in support of the winner was from dark money groups.

As the letter notes,

Six years into your presidency, and five years after the Supreme Court issued its tragically misguided ruling in Citizens United v. FEC, we’re now living in a Wild West campaign spending world… Against this backdrop, it is imperative that you act.

You can add your name to the chorus of voices calling on the president to issue an executive order and read the full text of the letter here.

Thanks to some tax-return digging, ProPublica found this week that the Karl Rove-connected Crossroads GPS actually spent at least $11 million more on political activities last year than they told the IRS. ProPublica’s Kim Barker reported:

New tax documents, made public last Tuesday, indicate that at least $11.2 million of the grant money given to the group Americans for Tax Reform was spent on political activities expressly advocating for or against candidates. This means Crossroads spent at least $85.7 million on political activities in 2012, not the $74.5 million reported to the Internal Revenue Service.

But what’s an extra $11 million spent on political activities, right? Wrong. Tax-exempt 501(c)(4) social welfare groups are limited in the amount of political spending they can do while maintaining their exempt status. And these developments about Crossroads GPS only underscore the need for more robust government oversight of political spending.

Unfortunately, this is an effort that has been made much more difficult in the wake of recent Supreme Court rulings. As Michael Keegan noted in May, the 2010 Citizens United v. FEC decision opened the door to an explosion of spending by c(4) groups like Crossroads GPS because it allowed them to run political ads as long as they weren’t using the majority of their money for electoral work.

Moreover, dark money groups sometimes attempt to underreport the political spending that they do undertake, which has not been helped by the IRS’s past reluctance to issue “bright lines” around what must be counted as political spending.

But that may change soon. The Treasury Department and the IRS are expected to issue guidance today specifying what “candidate-related political activity” entails and how much of it 501(c)(4) social welfare groups are allowed to do.

If you’re curious why many House Republicans are on board with an unhinged plan to threaten a government shutdown or default over demands to “defund” Obamacare, you should follow the money. That’s what the New York Times editorial board argued in a compelling op-ed Tuesday.

Far-right groups such as the Club for Growth are striking out at Republicans who refuse to take this reckless stance, wielding their considerable funds to “inflict political pain” on those who do not share their extremist position. And they are titillating their Tea Party supporters with political fantasies in order to get them to send in even more money, so they can ramp up their attack on Republicans who don’t toe the line. In “The Money Behind the Shutdown Crisis,” the editorial board wrote:

These groups, all financed with secret and unlimited money, feed on chaos and would like nothing better than to claim credit for pushing Washington into another crisis. Winning an ideological victory is far more important to them than the severe economic effects of a shutdown or, worse, a default, which could shatter the credit markets.

[…] Brian Walsh, a longtime Republican operative, recently noted in U.S. News and World Report that the right is now spending more money attacking Republicans than the Democrats are. “Money begets TV ads, which begets even more money for these groups’ personal coffers,” he wrote. “Pointing fingers and attacking Republicans is apparently a very profitable fund-raising business.”

And as more money pours into these shadowy groups, their influence – and thus their potential for inflicting further damage on our democracy – grows. With fewer effective campaign finance regulations left standing in the post-Citizens United landscape, there is little that can stop these groups from using their money to bully elected officials.

But the functioning of our government is not a game. And though for these fringe groups making an ideological point may seem more important than keeping our government from shutting down or defaulting, Americans are tired of having our basic economic security called into question over political posturing.

As the Times editorial board put it:

It may be good for their bank accounts, but the combination of unlimited money and rigid ideology is proving toxic for the most basic functioning of government.

It was a big week for lifting the veil – at least a little – on the secretive world of conservative groups funding political campaigns. On Wednesday we wrote about new reports on two of the Right’s shadowy front groups which have been able to disguise the transfer of large sums of money to organizations supporting Republican causes and candidates.

Then Politico brought us a look inside what they call “the Koch brothers’ secret bank,” a previously unknown group called Freedom Partners which gave a quarter billion dollars in 2012 to sway public debate further to the right. Mike Allen and Jim VandeHei report:

The group, Freedom Partners, and its president, Marc Short, serve as an outlet for the ideas and funds of the mysterious Koch brothers, cutting checks as large as $63 million to groups promoting conservative causes, according to an IRS document to be filed shortly…

The group has about 200 donors, each paying at least $100,000 in annual dues. It raised $256 million in the year after its creation in November 2011, the document shows. And it made grants of $236 million — meaning a totally unknown group was the largest sugar daddy for conservative groups in the last election, second in total spending only to Karl Rove’s American Crossroads and Crossroads GPS, which together spent about $300 million. [emphasis added]

Though you likely have not heard of Freedom Partners before, you’ve heard of the groups it funds – including the NRA, Americans for Prosperity, Heritage Action for America, and Tea Party Patriots. According to their newly-launched website, Freedom Partners is “promoting the principles of a free market and free society” by advocating against scourges like “cronyism in America.”

This, from one of the biggest spenders in the last election.

Other than the Koch brothers, who are the donors behind this massively influential group? At this point, it’s hard to know. Despite the group’s president’s insistence that “our members are proud to be part of [the organization],” Freedom Partner’s membership page does not list a single one. It’s yet another example of the need for legislation like the DISCLOSE Act, which would shed light on the major donors behind the secretive outside groups attempting to shape our elections – and our country.

In today’s legal landscape, “following the money” is tricky – but a new report released yesterday shows why this work is critical to anyone who cares about progressive change. The latest digging from the Center for Responsive Politics’ Open Secrets blog has uncovered new information about a multi-tiered money laundering operation through which tax-exempt groups funnel millions to groups supporting right-wing causes and candidates.

Operating behind a thick veil of secrecy, groups like TC4 Trust and the Center to Protect Patient Rights – which Open Secrets describes as “‘shadow money mailboxes’ – groups that do virtually nothing but pass grants through to other politically active 501(c)(4) organizations” – are able to hide both their donors and their recipients. By funneling grants through “sub-units,” which are owned by the larger groups but have different names, groups like TC4 Trust put millions into the pockets of 501(c)4 organizations supporting Republican causes in the 2012 elections, such as the advocacy arm of Focus on the Family.

[T]heir financial ties run far deeper than previously known. The groups, TC4 Trust and the Center to Protect Patient Rights – both of which have connections to the billionaire industrialist Koch brothers – have been playing a high-stakes game of hide-the-ball, disguising transfers of millions of dollars from one to the other behind a veil of Delaware limited liability corporations.

The source of political advocacy matters. This latest example of dark money donor groups obscuring the links of their money trail underscores the urgent need for legislation like the DISCLOSE Act. This act would bring some basic transparency to the electoral system and require outside groups spending money in elections to disclose their donors – including the original source of donations. The measure, which was blocked by Senate Republicans in both 2010 and 2012, is a common-sense solution that would help the American people understand who is trying to influence their political opinions and their votes.